Vehicle sales jumped 7 per cent in Canada last month, giving the industry its fourth consecutive monthly sales record and keeping sales on a strong pace to break the annual sales record set more than a decade ago.
“We’re going to blow away every record out there,” said industry analyst Dennis DesRosiers, president of DesRosiers Automotive Consultants Inc.
The seventh consecutive monthly sales gain in Canada was one half of double-barrelled good news for auto makers, which also reported increases in the U.S. market despite the government shutdown early in the month.
The U.S. seasonally adjusted annual sales rate hit about 15.4 million vehicles in October, up from 14.4 million a year earlier.
“The strength of sales this month [is a] real testament to the strength of the underlying consumer demand,” Mustafa Mohatarem, chief economist of General Motors Co. told analysts and reporters on a conference call Friday.
“People are getting accustomed to some of the noise coming out of Washington and it may change peoples’ perspective on exactly when to pull the trigger in buying a new vehicle. We are not seeing much of an impact on the longer term trend, which has been a very positive trend,” he said.
The gain in Canada was broad-based. Each of the Canadian units of the Detroit Three posted increases, as did all companies based in Europe and Japan, except Suzuki Motor Corp., which is pulling out of the Canadian market.
Sales fell for Hyundai Auto Canada Corp. and Kia Canada Inc., whose parent companies are based in South Korea.
Ford Motor Co. of Canada Ltd. rode a 10-per-cent gain to first place in the month and leads the chart in the annual sales rankings as well.
General Motors of Canada Ltd. sales also jumped 10 per cent, which vaulted it into second spot above Chrysler Canada Inc. Chrysler sales rose 4 per cent, but it posted its 47th consecutive monthly sales gain.
U.S. sales executives said that the market shrugged off the 16-day government shutdown, with much of the gain coming in sales of pickup trucks.
“The available data suggests that economic conditions continue to improve at a modest pace,” Ford Motor Co. economist Emily Kolinski Morris said during the company’s monthly sales conference call.
She pointed to the housing market, which helps buoy sales of pickup trucks for Ford and its Detroit Three rivals. Sales of Ford’s F-Series pickup bounced 13 per cent higher. Sales of GM’s Chevrolet Silverado and GMC Sierra pickups jumped 11 per cent.
Sales of the Ram pickup sold by Chrysler Group LLC rose 18 per cent. “After a choppy start to the beginning of the month, Chrysler Group sales accelerated in the second half of the month with renewed consumer confidence,” Reid Bigland, Chrysler Group LLC head of U.S. sales, said in a statement.
The U.S. market is on pace to post its best results since 2007.
Morgan Stanley & Co. LLC analyst Adam Jonas, however, is raising what he calls yellow flags of caution.
“We think we’re seeing some early signs of a bubble due to what we call the three C’s: credit, currency and capacity,” Mr. Jonas told CNBC, noting that U.S. banks are getting aggressive on credit availability. He has previously pointed to the decline in the value of the yen giving Japan-based auto makers increased revenue to invest in upgrading their vehicles.
Auto makers are also adding capacity, Mr. Jones noted in a research note in September. “The dark side of the story has been the steady addition to North America capacity by every key player,” he wrote then. “As much as new capacity is required to liberate pent-up demand, it is also an enemy of pricing.”